Saturday, February 19, 2011

More on the class war

E.D. Kain at Balloon Juice:
The financial collapse of 2008 was caused by reckless economic elites who were well-connected enough to take risks and not suffer consequences for them.  This led directly to a $900 billion dollar decrease in the value of public pension funds (not to mention the depletion of privately held 401k’s and other middle-class sources of retirement savings). Now well-connected economic elites are blaming public workers for the sorry state of affairs we find ourselves in and want to cripple public labor unions and further deplete these ‘unsustainable’ public pensions in order to restore fiscal sanity, all while extending their own Bush-era tax cuts indefinitely. Money flows up, after all.
The middle class is being pit against itself. Somehow, thousands of laid off workers and the loss of retirement income for countless others is an economic boon, whereas taxing the wealthy is a sure recipe for fiscal insolvency. Wisconsin is just one example of this elaborate con. And it is a con.
Read the whole thing.

Not a good day for favorites

It's been tough on ranked teams today. #3 Texas, #4 Pittsburgh and #8 Notre Dame all lose.  St. John's has been playing well at home, having beaten Georgetown, Duke, Notre Dame, UConn and Pitt.  Not quite the glory days of the '80s, but not bad compared to recent years

Cattle aren't smart

I need to start carrying a camera around with me.  Twice this week, a heifer calf has gotten her head stuck in the fence, and I've had to help push her back through.  Both times, it would have made a good picture.  Maybe next time.

Birmingham, 1963

From Rick Perlstein's book, Before the Storm:
To its white citizens, Birmingham, Alabama, was a proud and grimy symbol of the South's industrial future, presided over by United States Steel Company's dwarfing works on its outskirts and a fifty-six-foot statue of Vulcan, Roman god of fire, in its bustling downtown-"Magic City," they called it, in wonderment at its population's doubling since the war.  To its black residents, who could be hardly called citizens, Birmingham was an everyday hell of quiet humiliation and frequent terror.  No segregation code was stricter ("It shall be unlawful for a Negro and a white person to play any game of cards or dice, dominoes or checkers"); nowhere were the consequences of transgression more terrifying.  In 1957 a local black minister name Fred Shuttlesworth announced his intention to send his children to white schools.  In retaliation, the Klan abducted a black man at random, castrated him, and poured turpentine on the wound.  Blacks lived on the east side of Center Street in Birmingham, whites on the west, and not for nothing were the borderlands in between nicknamed "Dynamite Hill."
Violence was burned into the city's soul.  U.S. Steel had been the last and the most viscious of the blue chips to accept industrial unionism in the 1930s.  The savagery of the battle shaped Birmingham's political culture.  In the early 1950s, U.S. Steel slowed down its hiring, then took advantage of the ensuing anxieties to demagogically install a low-tax, low-service city government.  As public safety commissioner, they chose a notorious savage who had got his start in police work as a union-busting goon: Eugene "Bull" Connor.

An Impressive Record

From Dr. Boyce Watkins:
Well, they've done it again. Urban Prep Academy of Chicago, an all-male charter school with kids from the "worst" parts of Chicago, is sending 100% of its graduating seniors off to college. The school, founded in 2006, has stated that its continuous objective is to see to it that all of its students go to college. They are succeeding with flying colors.
The school started with kids whose futures had been left for dead by their public schools: Only four percent of the school's incoming freshmen were reading at grade level when they arrived on campus. But by sending all of their graduating seniors to college, they've not only gotten these kids up to speed, they've allowed them to zip past every other public school in the entire United States.

"No other public [school] in the country has done this," said Tim King, the founder of Urban Prep.

The students at the school are required to wear a jacket and tie every single day. They also go to school for two hours longer than other kids. They take English twice a day and are given a mentor with a cell number that kids can call 24 hours a day. They've clearly hit the mark when it comes to understanding that getting our children to the land of educational success requires both academic and sociological strategies.

Wheat and Milling

A short history of milling in Minneapolis, from Wikipedia:
The St. Anthony Express newspaper predicted in 1855 that, "The time is not distant when Minnesota, with the superiority of her soil and seasons for wheat culture, and her unparalleled water power for manufacturing flour, will export largely of this article. ... our mills will turn out wheat, superior in quality and appearance to any now manufactured in the West." By 1876, eighteen flour mills had been built on the west side of the river below the falls. The first mills used traditional technology of millstones that would pulverize the grain and grind as much flour as possible in one pass. This system worked best for winter wheat, which was sown in the fall and resumed its growth in the spring. However, the harsh winter conditions of the upper Midwest did not lend themselves to the production of winter wheat, since the deep frosts and lack of snow cover killed the crop. Spring wheat, which could be sown in the spring and reaped in the summer, was a more dependable crop. However, conventional milling techniques did not produce a desirable product, since the harder husks of spring wheat kernels fractured between the grindstones. The gluten and starch in the flour could not be mixed completely, either, and the flour would turn rancid. Minneapolis milling companies solved this problem by inventing the middlings purifier, which made it possible to separate the husks from the flour earlier in the milling process. They also developed a gradual-reduction process, where grain was pulverized between a series of rollers made of porcelain, iron, or steel. This process resulted in "patent" flour, which commanded almost double the price of "bakers" or "clear" flour, which it replaced.  The Washburn mill attempted to monopolize these techniques, but Pillsbury and other companies lured employees away from Washburn and were able to duplicate the process.
Although the flour industry grew steadily, one major event caused a disturbance in the production of flour. On May 2, 1878, the Washburn "A" Mill exploded when grain dust ignited. The explosion killed eighteen workers and destroyed one-third of the capacity of the milling district, as well as other nearby businesses and residences. By the end of the year, though, seventeen mills were back in operation, including the rebuilt Washburn "A" Mill and others that had been completely rebuilt. The millers also took the opportunity to rebuild with new technology such as dust collection systems. The largest mill on the east side of the river was the Pillsbury "A" Mill, built in 1880–1881 and designed by local architect LeRoy S. Buffington. The Pillsbury Company wanted a building that was beautiful as well as functional. The seven-story building had stone walls six feet thick at the base tapering to eighteen inches at the top. With improvements and additions over the years, it became the world's largest flour mill.  The Pillsbury "A" Mill is now a National Historic Landmark, along with the Washburn "A" Mill.

I'm a Professional

What a sweet ride

Reds History

Yesterday on Redleg Nation, they posted this note:
This is great. From the Associated Press, on this day in 1944:
The Cincinnati Reds have started cradle snatching. General manager Warren C. Giles announced today signing 15-year-old Joe Nuxhall, a freshman at Hamilton, O., high school and a left-handed pitcher.

On Wisconsin

Wisconsin is one of my favorite places to visit, with their love of beer, deep-fried cheese curds, fish fries and dairy country.  Here's a little historical information from
Wisconsin's population grew from 305,391 in 1850 to 1,315,497 in 1880, of which 72 percent were foreign born or of foreign parentage. Additional European immigrants helped double the population to 2,632,067 by 1920. More than one hundred foreign-language newspapers were printed in Wisconsin in 1900. Most European immigrants were poor farm laborers who were drawn to America's farm frontier, which included Wisconsin. Not only could they find familiar work, but over time could own farms that dwarfed the largest old-country estates.
Due to their diverse backgrounds, Wisconsin's immigrants usually settled in communities and neighborhoods with their own countrymen. Consequently, for example, Koshkonong developed a Norwegian identity, Berlin a German identity, Monroe a Swiss identity, and Milwaukee neighborhoods were clearly Polish or Irish or German. The Fourth of July was celebrated exuberantly in immigrant communities as a statement of loyalty to the United States.
Wisconsin was populated most heavily by immigrants from Norway and the Germanies, but large numbers of Irish, Poles, English, Danes, Swedes, Swiss, Dutch, Belgians, and others also came. Most Hispanics, Greeks, Italians, southeast Asians, and African Americans from the South arrived later. Norwegian farmers formed the power base of twentieth-century La Follette progressivism. Germans from Mecklenburg, Pomerania, and elsewhere organized the turnverein (gymnastics) and liederkranz (singing) societies. Many Finnish dockworkers in Ashland and Superior embraced International Workers of the World union radicalism. Racine's J. I. Case and Mitchell Wagon Works had "Danes only" employment policies for decades. Wisconsin's rich and varied immigrant heritage is still celebrated in annual community events such as Stoughton's Syttende Mai (17 May, Norwegian Independence Day), New Glarus' Heidi Festival and William Tell Pageant, Jefferson's Gemuetlichkeit Days, and Milwaukee's International Folk Fair.
Also, this:
A sign over the barn door of the dairy farmer W. D. Hoard (who served as governor from 1889 to 1891) carried the reverent reminder that "This is the Home of Mothers. Treat each cow as a Mother should be treated." Dairying became Wisconsin's agricultural giant as the wheat belt shifted to Kansas in the post–Civil War decades. Norwegian, Dutch, and German immigrants were familiar with dairying. Hoard founded Hoard's Dairyman magazine (1885) and the Wisconsin Dairyman's Association, and successfully promoted mandatory annual tuberculin testing for cows. Refrigeration added extensive milk and butter sales to an already profitable international cheese market. The University of Wisconsin College of Agriculture provided inventions (cream separator and butterfat tester) and improved breeding, feeding, and sanitary techniques to all Wisconsin farmers. By 1930, there were 2 million cows and 2,939,006 people in Wisconsin, and in rural counties the cows were in the majority. After the 1930s, Rural Electrification Administration power lines allowed farmers to milk by machine instead of by hand.
Although Wisconsin became "America's Dairyland," some farmers concentrated on hogs, corn, vegetables, hay, and other grains. The Door County peninsula became a leading cherry producer. Potato and soybean expansion came later. Almost all farmers raised chickens and joined their area farm cooperative.
Wisconsin family farms became a basic social unit as well as an efficient food producer. Neighbors collectively "exchanged works" during planting and harvesting seasons, and helped "raise" each other's barns. Their children attended one-room country schools from first through eighth grade. Farm social life centered around barn square dances, church socials, the county fair, and the country school. Until the advent of the automobile and tractor, workhorses pulled the plough, and livery stables and hitching posts dotted village business streets.
Also it is the home of Pabst, Schlitz and Leinenkugels.

Update: How did I forget Blatz?

Naked Capitalism Link of the Day

Today's link: Wisconsin Draws the Line on Austerity Opportunism and Class War at Rortybomb. I found this piece interesting:
As a Chicagoan, I’m often lead to believe that the Upper-Midwest is the only place of sanity in this country. So I’m proud to see Wisconsin be the place where people draw the line and call BS on the attack on public workers, state budgets, and austerity amidst a financial, foreclosure and economic crisis where the government’s response has had the protection of banks, bondholders, creditors, Wall Street and the top 1% at all costs as the driving tenant, a class war driven by the rich.  Here are some other things I’m reading on the protests.
Doug Henwood was local when the protests started, and has pictures, thoughts and followup. Joel Rogers explains the politics of Wisconsin to Henwood: “To outsiders, it’s mysterious that the same state could have spawned Joe McCarthy and Robert LaFolette, or Scott Walker and Russ Feingold. Rogers explained that politics in Wisconsin has historically been driven by an alliance of industrial workers and capital-intensive dairy farmers on the left, opposed on the right by a mainly Catholic rural population. They’re pretty evenly divided, thus the contrasting figures and tight elections.”
I thought that description of Wisconsin was very interesting.  I think liberals are erring in this battle in Wisconsin by stressing that the 2009-2011 budget is in surplus.  While this is true, it ignores that it is only true because of the Obama stimulus plan, and that money isn't coming back.  I agree that it is stupid for Walker and Kasich to be pushing tax cuts through at this time, but even without them, there are serious holes which need addressed.  I don't think that the attacks on the public unions are warranted, and I think they are counterproductive.  The public sector unions have been willing to work with the states to try to address pay and benefit issues. They've taken pay freezes and furloughs, even as their middle class members have watched the rich and big business be coddled.  Republicans are going one way on a two-way street, and eventually they are going to get called on it.  Businesses and rich folks are going to have to ante up at some point.  Taxes on the wealthy have been cut again and again with promises of boosting the economy and creating jobs, so where are the jobs?

Update: An example of corporate welfare from Dylan Ratigan's interview with David Kay Johnson:
Oh, no, not at all. In fact, you mentioned that 2/3 of the companies in Wisconsin are not paying any corporate income tax. That’s mostly the big companies. It’s the mom-and-pop operations who actually tend to pay state income taxes. Wisconsin at one point had a giveaway program to Hollywood when they made the movie Public Enemies with Johnny Depp. For every dollar that they said they spent in Wisconsin they get 92 cents back from the government. Think about that, 92 cents from the taxpayers for every dollar that you spent. What an incredible giveaway program but almost nobody in the public knows this.

How the Middle Class became the Underclass

Incomes for 90% of Americans have been stagnant for at least 30 years. Meanwhile, the richest 10% are getting much richer.
The average American's income has not changed much, while the richest 5% of Americans have seen their earnings surge. This chart includes capital gains.

Are you better off than your parents? Probably not if you're in the middle class.
Incomes for 90% of Americans have been stuck in neutral, and it's not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.
In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data.
Meanwhile, the richest 1% of Americans -- those making $380,000 or more -- have seen their incomes grow 33% over the last 20 years, leaving average Americans in the dust.
Later in the article:
Tax cuts enacted during the Bush administration and extended under Obama were also a major windfall for the nation's richest.
And as then-Federal Reserve chairman Alan Greenspan brought interest rates down to new lows during the decade, the housing market experienced explosive growth.
"We were all drinking the Kool-aid, Greenspan was tending bar, Bernanke and the academic establishment were supplying the liquor," Deutsche Bank managing director Ajay Kapur wrote in a research report in 2009.
But the story didn't end well. Eventually, it all came crashing down, resulting in the worst economic slump since the Great Depression.
With the unemployment rate still excessively high and the real estate market showing few signs of rebounding, the American middle class is still reeling from the effects of the Great Recession.

Friday, February 18, 2011

Do Budget Cuts Hurt People?

Shorter Freddie DeBoer: They obviously hurt the least fortunate, while the tax cuts benefit the best-off:
Sullivan maintains a belief that perhaps some Republican-- some serious Republican-- will come along and take advantage of Obama's supposed weakness and put forth a budget plan that is serious. Well, hope springs eternal in the human heart. You would think that a man who has spent the last decade meticulously following America partisan politics would be immune to getting inspired by a Republican politician, but apparently not. What any actual Republican deficit strategy will amount to is yet more signaling of who is "good" and who is "bad" in the conservative mind. Why go after funding for the arts, when that's such a tiny sliver of federal spending that it's almost entirely symbolic? Because fags and weirdos make art. That's why.You can bet, though, that any proposal that is deemed sufficiently serious by Sullivan and any host of other conservative bloggers will be one that hurts the least well off. That's the shorthand that's being used here, after all. What's serious is what trims poor old people from the Social Security rolls and poor sick people from the Medicare rolls.

Here's what you won't find at the Daily Dish, or at the Corner, or in any of the other places showily demanding seriousness: the actual, human, negative consequences of harsh entitlement cutbacks. I mean, from reading online today, you'd be hard pressed to know why we have Social Security and Medicare at all. I'll tell you why: because our winner-take-all economic system leaves defenseless, impoverished people in its wake. We have Social Security because the sight of so many elderly people left literally homeless and starving , too old and weak to work, was unseemly to an earlier generation that was willing to take less for themselves to provide for others. We have Medicare because it is an obscenity for a country responsible for the atom bomb and the moon landing and the Hoover Dam to allow suffer and die from lack of health care access due to the vagaries of birth and chance. That's why those programs exist.
The class war is coming from above, and the warriors are winning.  The majority is losing, and most seem to blame the government, who can be their only defense against it.

Cotton Prices set Record

From this article:
Cotton prices have hit an all time high as demand from China coupled with shrinking global supplies of the commodity continues.

The price of cotton has gone above $2 (£1.24) a pound for the first time, prompting fears of further rises in the price of clothing, as cotton mills attempt to buy ahead of the deadline for March deliveries.
Cotton prices have risen more than 40% since the beginning of the year mainly due to increasing demand from the world’s biggest fibre consumer, China, combined with shortages bought about because of poor cotton crops in Pakistan and export restrictions in India.
Some clothing manufacturers such as Levi Strauss have already raised prices, while retailers such as H&M have blamed a drop in recent profits on the soaring cost of cotton.
Yesterday, the Wall Street Journal had a story on a Mississippi farmer discussing his planting intentions.  Corn, Soybeans or Cotton, how about all three.  That should make him some money this year.

Naked Capitalism Link of the Day

Today's Link: China Agritech: more miracles in the plant, at Bronte Capital.  This is the latest in a series of accusations of stock fraud in China.  It is a pretty funny piece, with pictures:
This plant represents half of the dry fetilizer the company produces - and a substantial portion of the company revenue.

The stock price of China Agritech has fallen from 30 dollars to 8 dollars (with most that fall happening before any shortseller went public about their concerns).  The market cap is still 165 million dollars.

If you look at the equipment and plant shown in these slides you do not see anything that looks like even 5 million dollars - let alone a substantial fraction of the market cap.  But that is not what you are buying.

You are buying Adonis - nah - Adonis times 105 (the total manufacturing staff of the company).  No workers anywhere in the world demonstrate this sort of productivity.

Market cap of the company: 165 million dollars
Value of the plant: not very much
Owning your bit of 105 Adonis: Priceless.

Yves Smith on the Wisconsin Budget Fight

The post is here.  This caught my eye:
It’s bad enough that the “make the workers suffer” push is misguided (any budgetary pain should be shared, not dumped on a single target group). According to David Cay Johnson of, the average Wisconsin pension is $24,500 a year, which is hardly lavish. But what is stunning is that 15% of the money contributed to the fund each year is going to Wall Street in fees. Thus the blame for any shortfall should go in very large measure to probable kickbacks rank incompetence in the state’s dealing with the financial services industry and the impact of the financial crisis on state revenues. A recent paper by Dean Baker concludes:
Most of the pension shortfall using the current methodology is attributable to the plunge in the stock market in the years 2007-2009. If pension funds had earned returns just equal to the interest rate on 30-year Treasury bonds in the three years since 2007, their assets would be more than $850 billion greater than they are today. This is by far the major cause of pension funding shortfalls. While there are certainly cases of pensions that had been under-funded even before the market plunge, prior years of under-funding is not the main reason that pensions face difficulties now. Another $80 billion of the shortfall is the result of the fact that states have cutback their contributions as a result of the downturn.
In addition, the governor has poor-mouthed about the state pension and budgetary concerns generally while handing out further tax breaks to business. And in a strained economic climate, the state has been increasing gimmies to corporations. The state had tried tightening up provisions which had contributed to 2/3 paying no taxes in 2007, often due to income shifting to lower tax states. But tax expert Lee Sheppard believes that corporate tax cuts implemented by Walker will probably undo 2009 tax law changes intended to increase revenues from corporations. And note corporations pay for only 5% of the state’s general revenues.
15% of pension contributions are going to Wall Street fees?  If that is the case, the Republican war on state pensions is actually going to morph into a war on Wall Street, which will get pretty interesting.

Randomness and Fraud

A discussion last night about the Madoff fraud reminded me of this Nate Silver post from 2009 questioning the legitimacy of Strategic Vision's polls.  I found the information fascinating, and wanted to repost it.  This introduction contains a lot of interesting stuff:
One of the things I learned while exploring the statistical proprieties of the Iranian election, the results of which were probably forged, is that human beings are really bad at randomization. Tell a human to come up with a set of random numbers, and they will be surprisingly inept at trying to do so. Most humans, for instance, when asked to flip an imaginary coin and record the results, will succumb to the Gambler's Fallacy and be more likely to record a toss of 'tails' if the last couple of tosses had been heads, or vice versa. This feels right to most of us -- but it isn't. We're actually introducing patterns into what is supposed to be random noise.

Sometimes, as is the case with certain applications of Benford's Law, this characteristic can be used as a fraud-detection mechanism. If, for example, one of your less-trustworthy employees is submitting a series of receipts, and an unusually high number end with the trailing digit '7' ($27, $107, $297, etc.), there is a decent chance that he is falsifying his expenses. The IRS uses techniques like this to detect tax fraud.

Yesterday, I posed several pointed questions to David E. Johnson, the founder of Strategic Vision, LLC, an Atlanta-based PR firm which also occasionally releases political polls. One of the questions, in light of Strategic Vision LLC's repeated failure to disclose even basic details about its polling methodology, is whether the firm is in fact conducting polling at all, or rather, is creating fake but plausible-looking results in order to increase traffic and attention to its core business as a PR and literary firm.

I posed that question largely as a hypothetical yesterday. But today, I pose it much more literally. Certain statistical properties of the results reported by Strategic Vision, LLC suggest, perhaps strongly, the possibility of fraud, although they certainly do not prove it and further investigation will be required.
There are several other good posts from that time frame hereThis one is especially entertaining:

And I thought Buckeyes fans were idiots

Alabama fan arrested for poisoning oak trees at Auburn:
A 62-year old Alabama fan named Harvey Almorn Updyke is the man responsible for poisoning the oak trees at Auburn’s infamous Toomer’s Corner. We briefly hit on it this morning but supposedly Updyke called a local radio station to fess up to the dirty deed and played it off as a practical joke. John Q. law in Alabama isn’t as amused though and Updyke was arrested and is currently being held on bond.  According the Associated Press, here is what he told the radio station after identifying himself as “Al from Dadeville”.
“The weekend after the Iron Bowl, I went to Auburn, Ala., because I live 30 miles away, and I poisoned the Toomer’s trees,” the caller said, according to the Associated Press. The caller said he had attended the Iron Bowl
And of course, he ended the call with “Roll Damn Tide”, because, you know, sports and mental incapacity go hand-in-hand.
ESPN reported he named his kids Bear and Crimson.

Thursday, February 17, 2011

More Manny Pacquiao

From 60 Minutes in November 2010:

Climate Change and Crop Yields

Stuart Staniford takes on pundits claiming that global warming is causing food shortages:
So, clearly, the overwhelming story in global agricultural yields is this: improving agricultural technology has increased yields at a steady, reliable pace - they have more than doubled over the last 50 years.  There just is absolutely no support in the data for the idea that climate change, or any other negative or scary factor you care to name - eroding soil, depleting aquifers, peaking oil supplies - is causing the agricultural yield curve to start bending downward.  Maybe they will in the future, but it sure isn't happening yet.

I would guess that with greater demand and tighter supplies comes the risk for major disruptions from a shift in global climate.  Will Ohio and Indiana begin to receive more rain on the poorly drained silty clay loams which make up the richest soils of the Eastern Corn Belt?  Will the 20-inch rain line move to the east and threaten the Western Corn Belt?  If the productive regions of the Midwest are affected in the long-term, there will be dramatic problems.  Could there be a multiyear drought in the Corn Belt?  Is that likely? I don't know. Australians are pretty concerned for the future of agriculture there.  The Imperial Valley could lose most of its irrigation water in the near future.  There are a number of potential threats to the food supply that may be caused by climate change in the future. 

Corn Ethanol and Rising Food Prices

Room for Debate features a discussion of food price increases (via the Dish).  There are several articles there.  From Kay McDonald:
The corn ethanol policy is a driver of high food prices worldwide. More than 15 percent of global corn production and a total of 35 million acres are devoted to U.S. ethanol. The U.S. is the largest exporter of corn, but we use twice as much corn to produce ethanol as we use it for food export.
Wheat and soy prices increase when corn prices are high, since their acreage allotment is replaced by corn. In addition, wheat and soy get substituted for corn as animal feed.
High corn prices cause higher meat, dairy, wheat and soy prices for consumers. Since last June, the corn price has doubled. Soy and wheat prices are each up 60 percent. Cattle and hog prices have risen 25 percent.
Kenneth Cassman cites supply and demand issues:
Three trends are responsible, and they have flown under the radar.
First, the speed of economic development in the world’s most populous countries has been faster than expected, resulting in higher incomes and greater per capita food consumption.
Second, crop yield gains have slowed, and grain yields have stagnated for a large portion of global grain supply. Examples include rice in Korea, Japan and China; wheat in India and much of Europe; and maize in China. Although conversion of new land to crop production can offset this slowdown, most spare land suitable for agriculture resides under rain forests, wetlands and grassland savannah. Conversion of these carbon-rich and bio-diverse ecosystems should be avoided because it would accelerate greenhouse gas emissions and increase extinctions.
Third, there has been a substantial decrease in funding of research to enhance yields by methods other than biotechnology.
I don't think ethanol makes that good of a fuel, but I like to drink me some.

The odd Adam Smith

My sister sent me a link to a podcast from Planet Money discussing Adam Smith, the father of Capitalism:
On today's Planet Money, we talk with Nicholas Phillipson, the author of Adam Smith: An Enlightened Life.
Besides learning about the intellectual and political world Smith inhabited, we hear a bit about the man himself:
He's a strange man. I mean, he had a reputation for being rather awkward ... He wasn't a good conversationalist. You know, he would sit down and actually switch off ... then suddenly he would wake up and go into a great monologue. ... He's an uneasy person. ...
His mother was formidable. ... This was a woman you didn't mess with. She is a dragon. People learned that the way you got on with Smith was to chat his mother up. And if you couldn't chat his mother up, then your relations with Smith were not going to be as close as you would like. He is a mama's boy. ...
I'll say that it seems that a lot of geniuses seem to be socially awkward.  I've got the socially awkward part down, just not the genius part. Damn.  The podcast is pretty long, but wide-ranging about Smith's life and philosophy.  The beginning of the podcast addresses Egyptian wheat imports and the misunderstanding over whether the democracy uprising was fueled by increased wheat prices or not.  They say, no, this was a separate uprising.

28 days to St. Patrick's Day

I tried to find the old ad with the guys sitting on St. Patrick's lap and asking for Guinness, but this was all I came up with.

Boeing's 787 Outsourcing Problems

Yves Smith also covers Boeing's outsourcing difficulties:
Direct factory labor is typically just north of 10% of the cost of most manufactured goods; for cars, we are told it’s 13%. Even if you can extract meaningful savings there, you have significant offsets: the upfront cost of re-orgainzing production (which in the outsourcing scenario include hiring costly outsourcing “consultants” and paying attorneys to paper up the deals), higher ongoing managerial costs, higher shipping and related inventory financing costs. Yes, there are cases like Apple where outsourcing has been a big success, but there are also others where the benefits have been underwhelming and have come at considerable costs to US workers, communities, and the economy (see a very good long form discussion by Leo Hindery).
Moreover, these cost savings come with higher risk. The greater span of operations increases business system rigidity and creates more potential points of failure. It is likely to take longer to notice screw-ups and the odds also favor it taking longer to localize and remedy them. Longer lead times mean a manufacturer may wind up with far more unwanted inventory if the economy turns or customer tastes change. Currency price moves can undo much of the expected savings.
But even if outsourcing is only marginally successful, it serves as a transfer from US factory workers to the managers and executives. The top brass can benefit even more, since Wall Street analysts usually look approvingly of outsourcing (I’ve been told by C-level officers of one public companies that they outsourced only because the analysts wanted it; the business case did not support it).
The rush to Mexico, and then China, has reversed in some places, due to quality issues and the lack of significant real savings.

Naked Capitalism Link of the Day

Today's link : China frauds that kill people, at Bronte Capital. From the story:
Rock climbing equipment is sold by name and reputation.  There is not a government standard but climbing equipment is tested to destruction by the International Mountaineering and Climbing Federation (the UIAA).  The UIAA produces one of the best private safety standards in existence.

Now to add to children's toys containing lead there is fake climbing equipment coming out of China.  Petzl - a reputable manufacturer - has been putting out warnings about equipment which copies their logo and stamps but does not meet UIAA standards.  The equipment fails under 70 percent of required test loads.

The Chinese frauds I write about will hurt you financially.

This Chinese fraud will splatter your brains on the ground.
That is a lot worse than breaking a cheap wrench working on the tractor.

Idiocy on display

At the HuffPo, some of the dumber amendments proposed for the 2012 budget (via Stan Collender);
Rep. Louie Gohmert (R-Tex.), for example, has introduced an amendment that bars the General Services Administration from paying construction or leasing costs for any federal building in the nation's capital. This situation could potentially lead to federal buildings that are leased, rather than owned by GSA, possibly defaulting on their lease agreements.
Rep. Steve Scalise (R-La.) has offered an amendment that would prohibit the president from using federal funds to pay for the salaries and expenses of his "czars" -- the shorthand for White House officials who are appointed without Senate confirmation. However, Scalise lists the specific names of positions that cannot receive the funds. Conceivably, the President could simply rename those jobs.
Rep. Paul Broun's (R-Ga.) amendment mandates that no federal funds may be spent on vacant federal properties. However, this could result in properties -- such as the White Oak Federal Department of Agriculture building in Maryland, which is 90 percent finished but still unoccupied -- being left vacant and unfinished.
Rep. Steve Womack (R-Ark.) intended to introduce an amendment that would prohibit federal funds from being used to buy and maintain teleprompters for President Obama, but his spokesman told The Huffington Post that they couldn't get the Congressional Budget Office's score in time to submit it. The congressman plans to introduce it in the future though and anticipates it could save taxpayers $5 million. (emphasis mine)
WTF is the Republican hangup with teleprompters, do they think Saint Ronnie never used one?  Maybe they want the Prez to write speeches on his hand or just talk word salad like some prominent Republican entertainers.

A Little Cub Bashing

Chris Sabo's Goggles on a bet with the Cubs site Ivy Envy (h/t J-Bird):
One of the best parts about being a fan of the Cincinnati Reds is that we get to make fun of the Chicago Cubs.
As American’s, we’re all entitled to make fun of the Cubbies (I believe it’s why John Hancock was in such a hurry to sign the Declaration of Independence), but it’s just more fun when you’re a Reds fan.
No matter how bad our respective seasons are going (and let’s be honest, both teams have had their fair share of issues), the one solace I was able to find in those lean years was when the Reds faced — and usually beat — the stupid Cubbies.
That’s why at the beginning of the 2010 season I made a bet with the friendly gentlemen at Ivy Envy about who would win more games in the the Reds/Cubs series.
Note: I picked the Reds.
For those of you keeping track at home, the Reds went an astonishing 12-4 against the Cubbies in 2010. Even the most delusional Cubs fan has to admit that’s a dominating victory.
But for every victor there must be a loser. In this case — and in most cases since 1908 — that loser is a Cubs fan.

Wednesday, February 16, 2011

It's a Beautiful Day

After spending much of the day on the computer trying to add content to the blog, I had to venture over to another farm to check on a pregnant cow.  I realized at this time how beautiful the weather is today.  55 degrees and sunny is pretty nice after the long grind of winter.  Mind you, it isn't exactly aesthetically beautiful, with the soggy brown grass showing through the receding snow, and the mud throughout the barnlot, but it is invigorating.  The cows were lying in the mud sunbathing (It is amazing how warm an angus cow's winter coat gets on a sunny 55 degree day).  This is one of the days when I am glad to be alive.  There are few better feelings than the one you get as you watch the tug-of-war between winter and spring, especially on a day in which spring has the upper hand. 

Reading the news everyday about politics and the Great Recession, about people suffering and hurting one another, it's pretty easy to lose faith in the existence of a Higher Being.  But on a day that I wait for a new calf to be born, a day when spring training kicks off another baseball season, a day that foreshadows the coming of spring and sowing another year's crops, a day of new beginnings, it is much easier to keep that faith.  Now please, pardon me, I have to go back out.

More Cincinnati Beer

Besides Burger, I try to grab some Moerlein, Little Killers or 14-K on occasion, but the Hudepohl Amber I had down on Fountain Square before and after the Bengals-Tampa game was excellent.  Unfortunately, I have yet to see it north of Dayton.  If you come across it, try it out. Here's some Hudepohl-Schoenling history.

Mr. Pacquiao goes to Washington

He visits the White House and the Capitol:
 Manny Pacquiao stopped traffic outside the White House on Tuesday, during a whirlwind tour of the nation's capital that included meetings with President Barack Obama and Sen. Harry Reid. The Filipino boxing sensation was crossing the street near the White House when several drivers, trying to snap photos of Pacquiao with cell phones, caused a multicar pileup, Pacquiao publicist Fred Sternburg told The Associated Press. Nobody was hurt in the accident.
Pacquiao and his wife, Jinkee, spent time talking boxing and basketball with the President, along with a bit of business. Pacquiao was elected representative of the Sarangani province nine months ago in national elections in the Philippines and has taken the new job as seriously as he does boxing. He's already explored building the area's first provincial hospital.
"This is an unforgettable moment in my life," Pacquiao said earlier in the day.
The eight-division world champion posed with Obama for several photos, including a boxing pose, in the Oval Office, Sternburg said. The President gave him three grocery bags full of light blue M&M's with the presidential seal, along with a watch adorned with the seal, and said he hopes to someday visit the Philippines.
Pacquiao invited the President to his fight against Shane Mosley on May 7 at the MGM Grand in Las Vegas, Sternburg said. Obama said he would be busy but promised to watch on television.
Update: Hanging out with Pacquiao is probably the coolest thing Harry Reid has ever done.


Well, no deal. I would think this will be an annoyance and distraction for the Cardinals all year, which can only help the Reds.  Honestly, nobody is worth $30 million a year, but Albert is easily the best player in the game.  Even with what was an average year for him, he finished second to Votto for the MVP, while leading the league in home runs and RBIs.  Not a bad showing after winning 3 of the previous 5 MVP awards.  That makes next year's Hot Stove League very interesting, waiting to see who will try to bid against the dirtbag Yankees for his services.

Why I kind of like Mitch Daniels

As far as Republicans go.  From Daniel Larison, this mainly:
One thing that makes it harder to estimate the strength of a candidate for the nomination is the ease with which a relative handful of activists can effectively tar a candidate as compromised or tainted very early on. As we are seeing with the treatment of Mitch Daniels, activists from one faction or another will savage a broadly acceptable candidate with no obvious, serious liabilities simply because he does not give their issues the priority that they think he should. This isn’t a matter of single-issue activists objecting to a candidate because of real disagreements on policy. No one can actually point to anything Daniels has said on foreign policy or social issues that would put him substantively at odds with the broad majority of Republicans, but social conservatives and foreign policy hawks interpret a lack of statements on their issues as something close to betrayal. Arguably, Daniels’ main weakness, if we want to call it that, is his consistent refusal to pander to these activists by talking up their issues.

Daniels is convinced that our attention must be focused on the government’s enormous fiscal predicament, and he sees everything else as subordinate or secondary to that. As far as domestic policy is concerned, that’s a very sound position to be taking. It isn’t going too far to say that Daniels is just about the only prospective 2012 candidate making an argument for a governing agenda. He seems to be paying all of his attention to the area of policy he knows best at a time when many conservatives are at least claiming that they take the problem of mounting debt seriously. Since he has not spent a lot of time governing as a social conservative firebrand, it doesn’t make sense for him to campaign as one, and as a governor he isn’t plunging into a foreign policy realm that is less familiar to him. That’s not a bad idea. Unlike certain former governors, he isn’t making the mistake of recycling bad think tank talking points as if they were insights into international affairs.
Also, he's the only Republican I've heard who has mentioned that taxes may have to go up.


Reds pitchers and catchers report.  Baseball is upon us:
Finally. The long, hard winter is over.
Baseball is back.
Reds pitchers and catchers officially report to spring training today, out in Goodyear, Arizona. There won’t be any games for a while, and the real competition for roster spots will not heat up for a few weeks. Dusty Baker won’t be mangling as many toothpicks just yet, and no one’s frustration with CoCo is going to bubble over. Players will be going through the motions, doing more stretching than you thought possible, and there may be a laugh or two. Pitchers will complain about the repetitive PFP drills, and Brandon Phillips will show up early with a big smile.
I can't wait to crack a cold one and tune in Marty and the Cowboy.

What if...

...there is a Hockey Day in America, and nobody notices? 
The NHL and NBC Sports will celebrate America’s passion for hockey with the inaugural “Hockey Day in America” presented by McDonald’s on Sunday, February 20. With six hours of coverage (Noon-6 p.m. ET) – which will include four NHL games – hosted from McCormick Tribune Ice Rink in Chicago’s Millennium Park, NBC Sports will tell the stories that demonstrate this country’s affinity for hockey – from hockey parents who chauffeur pee wees to practice before sunrise to the U.S. Pond Hockey Championships in Minnesota, played by amateurs amidst arctic temperatures, to ‘celebrity’ hockey played by actors and producers in Los Angeles to inner-city hockey in Washington, D.C. that has made a difference in the lives of countless children and young adults.
Also on Sunday, Calgary hosts the Heritage Classic, which will be shown on Versus:
The NHL's Facilities Operations Manager has been hard at work for two weeks, getting McMahon Stadium prepared for the 2011 Tim Hortons NHL Heritage Classic between the Montreal Canadiens and Calgary Flames.
I have to admit, I like to watch the Winter Classic on New Year's Day.  It helps break up the day amongst all the bowl games where the Big Ten (now with 12 schools, instead of 11) is getting its ass handed to it, and it usually ends before the Rose Bowl.

Boehner and the budget

Dana Milbank, normally a don't-rock-the-boat columnist, goes hard over Boehner and his calls for the elimination of government jobs created under Obama:
Well, Mr. Speaker, I do. I checked with budget expert Scott Lilly of the Center for American Progress, and, using the usual multipliers, he calculated that the cuts - a net of $59 billion in the last half of fiscal 2011 - would lead to the loss of 650,000 government jobs, and the indirect loss of 325,000 more jobs as fewer government workers travel and buy things. That's nearly 1 million jobs - possibly enough to tip the economy back into recession.
So be it?
Let's assume that Boehner is not as heartless as his words sound. Let's accept that he really believes, as he put it, that "if we reduce spending we'll create a better environment for job creation in America." A more balanced budget would indeed improve the jobs market - in the long run.
But in the short run, the cuts Boehner and his caucus propose would cause a shock to the economy that would slow, if not reverse, the recovery. And however pure Boehner's motives may be, the dirty truth is that a stall in the recovery would bring political benefits to the Republicans in the 2012 elections. It is in their political interests for unemployment to remain higher for the next two years. "So be it" is callous but rational. (emphasis mine)
Steve Benen adds to the story:
What's more, PolitiFact looked into Boehner's claim about 200,000 new federal jobs and found that the Speaker's claim just isn't true. This is important -- Boehner wants to force hundreds of thousands of Americans from their jobs, deliberately, and he's basing this decision in part on a statistic that he's simply made up.
How'd this guy even get to be Speaker in the first place? What kind of national leader looks at a 9% unemployment rate and presents a plan to knowingly make it worse?
Things are going to get worse before they get better.  Hopefully it dawns on Republicans that taxes will have to go up, but they seem to be pretty damn dense.

Update: According to Politifact, Boehner claims that about 50,000 of the 200,000 jobs he is talking about were temporary Census jobs which were converted into full-time equivalent numbers.  So 50,000 of those jobs were created to carry out a federal duty laid out in the Constitution, and they are already gone.  Please, STFU.

Naked Capitalism Link of the Day

Today's link: Wisconsin's Cheesy Tax Cuts, by Lee Sheppard at Forbes.  I'm sorry, but when Forbes is blasting you for stupid tax cuts, you have some seriously stupid tax cuts.  Wisconsin seems to have elected a guy who consistently one-ups Kasich.  Nice job cheese heads. The requirement of a supermajority vote to increase income or sales taxes is plain dumb.

Tuesday, February 15, 2011

Some people shouldn't gamble

Pete Rose and Art Schlichter should avoid all gambling, they are not very good at it:
Former Ohio State quarterback Art Schlichter remained jailed after making a brief court appearance on a charge of stealing more than $1 million from a 68-year-old woman. The 50-year-old Schlichter appeared in Franklin County Municipal Court in Columbus on Tuesday. A judge agreed to his requests to waive a preliminary hearing and pass on having bond set.
Schlichter's case was immediately transferred to the county common pleas court system, where assistant prosecutor Jay Moore said Schlichter could face additional charges.
Of course, he may not have been gambling with the money, but odds are he was.

Because we're from Iowa son

Beanpot Championship

BC beat Northeastern 7-6 in OT to extend Northeastern's streak to 23 years without winning the Beanpot.  BC remains #1 in the national poll.

Budget Beer

If you are having cash-flow issues, or don't like to pay for advertising, avoid Busch or Milwaukee's Best and consider Burger Classic.  A Cincinnati beer which has been brought back from the dead, it can be had for $5.99 a 12 pack. 

The Gold Glove

Joe Posnanski has a post on "interesting" Gold Glove awards:
It has long been accepted -- and for good reason -- that the worst choice ever for Gold Glove was Rafael Palmeiro in 1999. To argue against Raffy is to be arguing for belligerence sake ... the man played 28 games at first base that year and 135 games as a designated hitter. A blunder of that magnitude -- giving a guy a gold glove when he played barely a month's worth of games at a position -- cannot be topped ... unless they decide to give a Gold Glove to someone who played 27 games in left field or an Oscar to Marisa Tomei for her light comedic turn as Joe Pesci's girlfriend.
He goes on to analyze players who only won one Gold Glove in their career, and whether they probably deserved to win more, or didn't deserve to win the one.

Budget cuts are bad

...when they hit programs you like.  Discussion of cuts in Indiana schools amongst Ag teachers.
My original question was; "What would this do to agricultural education?" In a normal setting in a normal year, ag teachers would be worried about whether money for reimbursement for schools for training vo-ag students would remain intact. This night I actually never got an answer to my question.
Why not? Because they were so dejected by what they feel could be the impending doom of all public education that this time they believe it's much bigger than themselves. They believe all teachers are under attack, not just ag teachers.  One person in the room is at a small school, the size Governor Daniels targeted for consolidation a year ago. He figures he'll still have a job next year, but his future after that, is very much in doubt.
There is little doubt that all public employees, not only all teachers, are under attack.  Big money interests have done a whale of a job pummelling the private sector and then pointing to the public sector and stoking envy in the private sector folks barely holding on to the middle-class dream.  They seem to be getting their way.  I would suggest driving around some of the ritzy suburbs and seeing who is really cleaning up.

Not Fannie and Freddie, AGAIN

Barry Ritholtz takes on the "blame the government" crowd yet again.
There is no way to reconcile this chart with the jihadist blatherings of folks like AEI and CATO.
The facts of the matter are simply this: During the housing boom, it was Wall Street, and their mad purchases of Sub-Prime, Alt A and non conforming loans for their privately issued securitization that drove the credit bubble. Not, as the ideologically blinded Peter Wallison claims, Fannie & Freddie.
Don't get me wrong, Fannine and Freddie were part of the problem, but Wall Street was the biggest problem.

Naked Capitalism Link of the Day

Today's link: Bill O'Reilly's Tidal Skepticism Launches "You Can't Explain That" Meme at GeekSystem

Money and People

From Ritholtz - Michael Lewis on his financial writing career:
“At bottom, I’m not all that interested in money,” Michael Lewis tells Planet Money:
It’s peculiar that I’ve written financial books and worked on Wall Street. … I’m interested in something else, and I guess that other thing is character and action and the general drift of societies. Money, because people care so much about it … is this great prism through which to view people.
That is a very good point. My prism through which to view peoples' characters and values is politics, but most of politics is also related to money.  The best part of politics is that people who profess to be Christian also tend to be most likely to want to stick it to the poor, just like Jesus taught, or at least He must have.

Boehner and Earmarks

Scott Lilly accuses John Boehner of adding pork to the budget to benefit his district with $450 million dollars of funding for a GE/Rolls Royce alternative engine to the selected Pratt & Whitney engine for the F-35:
The money will go to pay the costs to General Electric Co.’s General Electric Aviation unit and the British-owned Rolls Royce Group for their development of an engine for the new Joint Strike Fighter aircraft—money that looks, feels, and smells very much like an earmark.
Should the Department of Defense end up paying the two companies to develop the engine it is hoped that they will then buy significant numbers of them for the aircraft. The problem that the Pentagon has with this plan for using tax dollars is that they already have an engine for the plane—an engine that was decided on when the contract for production of the plane was agreed to 10 years ago.
But that does not deter union leaders, company executives, and local government officials in Dayton and Cincinnati from arguing their case. At a rally held at one of GE’s Ohio facilities last October, the company announced the addition of 500 new jobs at the Cincinnati and Dayton plants and emphasized the importance of congressional action to override Pentagon objections to the program. A story from the October 22 edition of the Dayton Business Journal entitled “GE’s fighter engine ‘a huge issue’ for Tri-State economy” reported:
The Pentagon insists GE’s second engine isn’t needed, that it has no use for it, and that further development is a waste of money. But the engine’s supporters in Congress—and Evendale, where GE employs more than 7,000—beg to differ...“It’s a huge issue. There’s a lot at risk here,” said Gary Jordan, president of United Aerospace Workers Local 647.
I'll go out on a limb and guess that Boehner didn't put that item in, either Mike Turner, Sherrod Brown or Rob Portman did.  So far as I have heard, Boehner never goes for pork, but he never fights fellow Ohioans who do.  Actually, he might fight Brown, but I don't think he'll fight Republicans.

Monday, February 14, 2011

Baseball's back

Teams have started to report to Spring Training.  The Reds pitchers and catchers report Wednesday.  All you America-hating baseball denigrators can go away until November.  As this post touched on, the Chicago Cubs are terrible, and 102 baseball seasons have elapsed since the Cubs last won the World Series.  Although it is dated by a few years, I give you this song:


A little history of Youngstown Sheet & Tube from Wikipedia:
The home plant of YS&T was known as the Campbell Works located in Campbell and Struthers, Ohio. This plant contained four blast furnaces, twelve open hearth furnaces, blooming mills, two Bessemer converters, slabbing mill, butt weld tube mill, 79" hot strip mill, seamless tube mills and 9" and 12" bar mills at the Struthers Works. The Brier Hill Works consisted of two blast furnaces named Grace and Jeannette, twelve open hearth furnaces, 40" blooming mill, 35" intermediate blooming mill, 24" round mill, 84" and 132" plate mills and an electric weld tube mill. During much of The Depression the Brier Hill works was shut down, but reopened in 1937. Much of the reopened plant's production centered around the production of tube rounds for the Campbell seamless tube mills. Due to the imbalance of ironmaking and steelmaking facilities at the two plants, rail shipments of molten iron "hot metal" were made from Campbell to Brier Hill from 1937 until 1979.
In 1916, Sheet and Tube workers at the East Youngstown plant rioted during a strike over working conditions, which resulted in most of the town's business district being burned to the ground. The strike was quelled by the arrival of National Guard troops. After the riots, East Youngstown was renamed Campbell in honor of the company's President. In 1937, Youngstown Sheet and Tube played a prominent role in the Little Steel Strike, along with Republic Steel, Inland Steel, Bethlehem Steel, and Weirton Steel. The so-called "Little Steel" group, led by Republic's Tom Girdler, operated independently of United States Steel, which had previously signed a labor agreement with the Congress of Industrial Organizations (CIO) and its subordinate Steel Workers Organizing Committee (SWOC). Violence during this strike resulted in the deaths of workers in Chicago and Youngstown.
In 1952, during the Korean War, President Harry S. Truman attempted to seize United States steel mills in order to avert a strike. This led to the U.S. Supreme Court decision of Youngstown Sheet & Tube Company v. Sawyer, which limited presidential authority.
The company abruptly closed its Campbell Works and furloughed 5,000 workers on September 19, 1977, a day remembered locally as "Black Monday." The Brier Hill Works and the company's plants in Indiana were sold to Jones and Laughlin Steel, later acquired by Ling-Temco-Vought (LTV), a conglomerate. The Brier Hill Works closed in 1979 as part of a continued wave of steel mill closings that devastated the Youngstown economy. The Brier Hill Works eventually reopened and are now operated as V & M Star Ohio, a recycling mini-mill owned by the Vallourec Group, a French conglomerate.
Update: A CNN story from 2008, about Youngstown's plan to abandon parts of the city and move residents to other neighborhoods, a plan that Detroit is now considering:
Already, delegations from smaller, post-industrial cities like Flint, Mich.; Wheeling, W.Va.; and Dayton, Ohio, have come to Youngstown to study the plan.


Matthew Yglesias takes on glib t-shirts proclaiming "Tyranny Response Team":
The fact of the matter is that tyranny is a serious problem, and it calls for serious solutions and serious responses. The idea that the common man is going to use small arms to fight off a modern, 21st century military organization is ridiculous. And the idea that there’s going to be widespread household ownership of the kind of anti-tank missiles and other weapons you’d need to fight such a war is also absurd. In the real world, people stand up to tyranny with nonviolent tactics of civil disobedience that let protestors fight for the loyalty of the security services’ rank and file.
Matt is absolutely right in any case where the nation's citizens are being attacked by their own army, invading armies have more difficulty because they are only projecting a small portion of their forces in a hostile nation.  Even then, the citizens need serious help from some arms dealers to be able to put up the fight.  Iraq was loaded with AK-47s, and yet Saddam Hussein stayed in power until the US arrived.

Why the large oil price differences?

I previously misunderstood the cause of the spread between West Texas Light Sweet price of oil and the Brent price, which has been over $10.  I was under the impression that there was a potential corner in the Brent market. Finally I heard this piece on the radio, and actually uderstood what they were talking about.  Here's another article on the situation at  From the story:
With a working capacity at 40 million and current inventories at 38.3 million that does not leave much for speculators to work with. If there was an accident downstream from Cushing and they had to halt deliveries out of the Cushing inventory they need some surplus capacity for that kind of emergency.
Compounding this problem is the rising flows coming from Canada and the oil from the Bakken taking up refinery capacity and leaving more oil at Cushing. Transcanada Corp just completed a new arm of its Keystone pipeline to connect Cushing to the flow of crude from Alberta. That is going to be 150,000 bpd of new supply headed for Cushing.
This is going to increase the pressure on WTI as Cushing storage fills up and leave traders nowhere to turn. The problem will eventually be solved when Transcanada completes another pipeline to the Gulf of Mexico in 2013. This will relieve some of the inventory pressures at Cushing but that is two years away. That is a lifetime in the futures market.
With the Bakken ramping up from 350,000 bpd to 500,000 bpd over the next two years and Canadian oil sands production increasing the pressure on the WTI price is going to be immense. Odds are very good the spread between the Brent and WTI contracts will become even wider.
The Brent contract is primarily North Sea oil and unlike WTI it can be delivered anywhere in Europe.

Domestic Terrorism

The New York Times follows up on the bomb placed on the MLK parade route in Spokane, WA (h/t Anne Laurie):
Nearly a month after a cleanup crew found the live bomb along the planned route of a large downtown march honoring the Rev. Dr. Martin Luther King Jr., the F.B.I. is investigating the incident as an act of domestic terrorism. And Spokane has cycled from shock to relief to reassessment: have the white supremacists who once struck such fear here in the inland Northwest returned at a new level of dangerousness and sophistication?
“We don’t have that kind of intelligence level to make that kind of explosive,” said Shaun Winkler, a Pennsylvania native who recently returned to the region to start a landscaping company and a chapter of the Ku Klux Klan.
At the end of the article, Mr. Winkler goes on to demonstrate said lack of intelligence with this quote:
Mr. Winkler, the Klansman, said he still believed that the region was a good place to nurture a racist movement. And as for the bomb in Spokane, he added, “Even though we wouldn’t have participated in that, it certainly wouldn’t have hurt my feelings if it did go off.”
Maybe Fox News should cover this with the zeal it shows for the New Black Panther Party.

Are the Cubs Cursed?

No, they just suck, according to the newly released book Scorecasting, by Tobias Moskowitz and L. Jon Wertheim  (h/t DougJ):
Defense doesn’t win championships. Teamwork isn’t what it’s cracked up to be. Momentum is a myth. And the Chicago Cubs aren’t cursed; they just stink.
Conventional wisdom, sports division, takes a beating in “Scorecasting,” a book aimed at unsettling serious fans with essays that debunk ingrained strategy (punting on fourth down is largely a waste); malign the approach of champion athletes (Tiger Woods is foolishly less aggressive when he’s putting for birdie than for par); and offer a number of otherwise eye-opening assertions (officials in all sports are biased). For their arguments, the authors, Tobias J. Moskowitz, a behavioral economist at the University of Chicago, and L. Jon Wertheim, a senior writer for Sports Illustrated, have whipped up a recipe that includes statistical analysis, psychological theory, creative sociology and a brash confidence in circumstantial evidence. If that sounds a little familiar, well, they owe a debt to Malcolm Gladwell and the “Freakonomics” boys.

Naked Capitalism Link of the Day

Today's Link: Farm Insurance Fraud is Cheating Taxpayers out of Millions, at the Los Angeles Times. From the story:
The federal investigator took the witness stand and described the crime scene: a sprawling field clogged with boulders, native grasses and knee-high sagebrush.

The defendant, a California farmer, had said the site was a 200-acre wheat field. But the investigator found no tilled soil, no tractors, no plows. In fact, she testified, she found no wheat.

The field was just a field — and a prime example, federal prosecutors allege, of a wave of agricultural insurance scams sprouting across the nation.

Such crimes are being perpetrated by farmers who fraudulently claim that weather or insects destroyed their crops to cash in on a government-backed insurance program. Some cheats never bother planting at all. Others sell their harvests in secret and then file claims for losses, collecting twice for the same crop.

One North Carolina tomato grower, armed with a camera and a party-size bag of ice cubes, created a mock hailstorm in his fields and swindled the federal government out of $9.2 million.

These growers — along with crooked insurance agents and claims adjusters — are using the program to bilk insurance firms and the U.S. government out of millions of dollars a year, according to prosecutors, industry officials and high-tech experts who review questionable claims for the U.S. Department of Agriculture.
Locally, this was the largest case I can remember:
“There is an ongoing conspiracy, involving crop insurance agents and farmers, to defraud the federal crop insurance program” through “money laundering,” the paper reported Kevin Ganger, a special agent with the U.S. Department of Agriculture’s Office of the Inspector General, as saying in an affidavit for a search warrant executed at a Versailles farm Sept. 13.
According to the report, that affidavit was used to obtain nine other search warrants for farms in Mercer and Auglaize counties in Ohio, as well as Jay, Wells and Adams counties in Indiana. The investigation was initiated, according to the paper, based on information from “several sources” that two insurance agents were furnishing Darke County farmers with falsified actual production history forms to increase indemnity payments for federal crop insurance claims.
Ganger noted that the Versailles farmer received FCIC and other crop insurance payments of $66,612 in 1997, $208,257 in 1998 and $288,128 in 1999.
Not the type of attention farmers need.  Naked Capitalism is loaded with good links today.

Wickard v. Filburn

I just started reading Before the Storm: Barry Goldwater and the Unmaking of the American Consensus, by Rick Perlstein.  Early on, it mentioned the 1942 Supreme Court case Wickard vs. Filburn, which expanded the authority of Congress in the regulation of business under the Commerce Clause to be almost unlimited in scope.  This ruling will almost certainly play a significant part in either sustaining or overturning the Affordable Care Act (Obamacare).  What caught my eye in the book was that Roscoe Filburn was a farmer from Montgomery County, Ohio.  From Wikipedia:
Wickard v. Filburn, 317 U.S. 111 (1942), was a U.S. Supreme Court decision that dramatically increased the power of the federal government to regulate economic activity. A farmer, Roscoe Filburn, was growing wheat to feed his chickens. The U.S. government had imposed limits on wheat production based on acreage owned by a farmer, in order to drive up wheat prices during the Great Depression, and Filburn was growing more than the limits permitted. Filburn was ordered to destroy his crops and pay a fine, even though he was producing the excess wheat for his own use and had no intention of selling it.
The Supreme Court, interpreting the United States Constitution's Commerce Clause under Article 1 Section 8 (which permits the United States Congress "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;") decided that, because Filburn's wheat growing activities reduced the amount of wheat he would buy for chicken feed on the open market, and because wheat was traded nationally, Filburn's production of more wheat than he was allotted was affecting interstate commerce, and so could be regulated by the federal government.
Roscoe Filburn was a farmer who admitted producing wheat in excess of the amount permitted. Filburn argued however that because the excess wheat was produced for his private consumption on his own farm, it never entered commerce at all, much less interstate commerce, and therefore was not a proper subject of federal regulation under the Commerce Clause.
In July 1940, pursuant to the Agricultural Adjustment Act (AAA) of 1938, Filburn's 1941 allotment was established at 11.1 acres (4.5 ha) and a normal yield of 20.1 bushels of wheat per acre. Filburn was given notice of the allotment in July 1940 before the Fall planting of his 1941 crop of wheat, and again in July 1941, before it was harvested. Despite these notices Filburn planted 23 acres (9.3 ha) and harvested 239 bushels from his 11.9 acres (4.8 ha) of excess area.
Roscoe Filburn continued to farm until his death in Dayton, Ohio on October 4, 1987. He changed the spelling of his family name to Filbrun roughly a decade after losing his Supreme Court case. In 1966, a quarter-century after this case, he persuaded other successors to his grandparents' original 640-acre farmstead to sell their land for development. The Salem Mall in Dayton, Ohio now occupies much of the land farmed by Filbrun's extended family. Roscoe Filbrun took a leading role in facilitating zoning changes and in developing sewage and water systems for the mall. The ninety-five acres that he farmed became a residential subdivision; the adjoining nine acres of forest became commercial real estate. A street on the land that was his is named Filbrun Lane in his honor. Neither child of Roscoe and Virginia McConnell Filbrun adopted agriculture as a profession.
I guess that entry ought to read, The Salem Mall used to occupy much of the land.